OnLive Turned On

Like you said, it's a new technology and people have questions, but I think one of the best things that you guys are doing is saying, "Hey, we've got Konami. We have Capcom. We've got Epic and all these game publishers." It kind of gives people an indication that maybe you guys are onto something here if they're agreeing.

Can you kind of describe in general how OnLive went about convincing these publishers to release their games on the service? And how did that go in convincing them to support and put their games on OnLive? It seems like they've been receptive.

SP: There's been secret data centers that we've set up. [laughs] And we announced one of them with BT. People don't realize that damn thing has been up since 2009. All this time, we've been in Europe.

What we did is we certainly talked to publishers, but you don't really push this one through the publishers. It was the developers. It came from the bottom up with the publishers. The developers, we gave them test accounts on these private servers.

And it was kind of funny because we had to maintain confidentiality between each of them. So, they're all going to be surprised with this announcement. They have no idea how many publishers are coming because we kept them all separate up until this point.

So, the way OnLive was picked up by the developers is very simple. They got on, and they started to play it. That's it. They started to use. And that answered every question they had. They took the thing home. They tried it from their own connections. They used it. They hammered on it. They asked us questions. They dug into it.

Some of them put in network impairment simulators, which would go and add packet loss, add latency and the equivalent of congestion, jitter, etcetera. And that's why. You know, this is their brand. Their reputations are going along with these games, right? They're not just going to throw them out there on anything.

And so it was after that that, one by one, they came in.

The developers are bubbling over. And the business guys who are running the companies, are bit more cautious. You know, they're sensible. They have to maintain their existing relationships, and they should. But the developers, what they're like is, "Not only do I get rapid distribution but I can watch people while they're beta testing. I can actually see people while they're playing my game." Which is so cool.

And then the developers, they spoke to their parent companies.

SP: They said, "This is cool. We should be on this thing. We should try it." And then we talked to the parent companies. The business proposition is very good for them. The thing with used games... Before the days of GameStop, the publishers have always had bargain bins. When games get older, they charge less for them.

The difference now with GameStop is those dollars, when the price goes down, don't go to the people taking the risk on creating the content. They're going into GameStop, which certainly has some retail risk and so on, for overhead, that's certainly true. But none of it is going to the publisher.

They don't have a problem with online games being cheaper, you know. It's whatever the market will bear. They're not going to charge more for a game than people will pay. But what they want to be able to do is make it so that the tail of the life of these games comes back to them. Because otherwise, they're very, very motivated to make games that have very short experiences, so they can make as much money as they can before it enters the used game market.

With OnLive, it gives them an opportunity to do that where you can't copy the game. There's no piracy. There's no used games. It gives them the opportunity and makes it so that the dollars that are paid for for games funnel into game development.

They're still subject to competitive forces. If there's a better game out there, people will go to the other game. And if people stop playing the game, they're going to have to lower the price. So, the market will determine the price of the game, and they have to create a game.

So, it's not going to change anything from the point of the consumer and the cost of games to them. It will change things from the point of view of how many games they're going to get, what kind of risk the publishers are willing to take on new ideas, and how sophisticated those games are going to be. That's what's going to change over the next year or two.

You haven't revealed the pricing for the actual games yet.

SP: No, I can tell you. The range is from about $5 to... We have one game that's $60 that's a brand new, very hot game. But most of them are in the middle. It looks just like you'd expect. It's a smorgasbord of games. You're going to find some casual games, a couple casual games, and then... Some very high-end new games. And then there's a bunch of demos that are free.

And then there are some games available for rental, too, which is kind of cool. And you can keep extending the rentals, if you want. So, if you rent the game and you want to play a game because you've got a whole weekend to spend or something, go for it. So, it's another way to get into a game that's less expensive.